EURO INDIES COULD DERAIL EMI MERGER WITH WMG, UMG, SONY
This follows reports that Universal has re-entered the bidding for the company being conducted by Citigroup, while Sony/ATV remains in the hunt for EMI Music's publishing assets.
Independent companies believe reinforcing the duopoly would be the worst possible outcome of the EMI negotiations--for music, those who make it and those who want to access it.
The organization has requested the EC to investigate all possible options to intervene, already highlighting the dangers of Universal’s power. The concerns cover not only music but also the vital online and mobile market.
In its Universal/BMG Songs music publishing merger decision, the EC said Universal is an indispensable trading partner, noting it controls more than half the world’s music in publishing and recording. The EC and the European courts also raised concerns about Sony’s market power in the infamous SonyBMG cases. More recently IMPALA asked the EC to look into Universal’s moves in the live sector via its tie-up with Live Nation.
Even if Universal or Sony attempts to construct a deal for EMI with a third party or with divestments, IMPALA insists it would still increase their market power. The trade org believes that the regulators would not be convinced by such an approach and points out that, even if they did, it could end up in the courts. The independents consider that the buyer would still have to sell at the end of the day at huge cost. Citgroup is insisting any potential EMI buyer take responsibility for pushing the deal through regulatory.
As far as WMG’s bid is concerned, IMPALA’s position is that it could help balance the duopoly but would still need substantial remedies as it would increase the competitive gap for the independents.
IMPALA believes a solution should be possible because of the precedent from 2007 when Warner already recognized the importance of the independent sector and demonstrated its willingness to find far-reaching remedies.
IMPALA's Executive Chair Helen Smith commented: “We have always said our position is no mergers without remedies and we know from 2007 that it is possible to find a solution which is far-reaching enough. Our problem with Universal, however, is that we believe it is simply too big already to be allowed to gain more power and we have the same concerns over Sony buying EMI publishing. Making such a duopoly more powerful goes completely against the basic principles of competition in cultural markets.”
IMPALA was established in April 2000 to represent independent music companies. 99% of Europe’s music companies are small or medium-sized enterprises. Known as “independents,” they produce more than 80% of all new releases and the sector’s jobs
